Global Payments Reports First Quarter Earnings for Fiscal 2013 Obtains Commitments for New Financing

Reaffirms Fiscal 2013 Outlook

ATLANTA, Sept. 27, 2012 /PRNewswire/ -- Global Payments Inc. (NYSE: GPN), a leading, worldwide provider of electronic transaction processing solutions, today announced results for its fiscal first quarter ended August 31, 2012. 

(Logo:  http://photos.prnewswire.com/prnh/20010221/ATW031LOGO )

First Quarter 2013 Summary

  • Revenue grew 9% to $590.3 million compared to $542.8 million in the first quarter of 2012.
  • Cash diluted earnings per share1 were $0.87 compared to $0.88 in the first quarter of 2012.
  • GAAP diluted earnings per share were $0.59, compared to $0.79 in the first quarter of 2012, and included processing system intrusion charges of $0.20.
  • On a constant currency basis, revenue and cash diluted earnings per share grew 12% and 3%, respectively.

Chairman and CEO Paul R. Garcia said, "We are executing on our fiscal 2013 goals and initiatives while we make steady progress on the data intrusion remediation.  We anticipate closing our two previously announced acquisitions, the remaining 44 percent ownership interest in our Asia-Pacific joint venture and the U.S. based Accelerated Payment Technologies business, in the second quarter.  These transactions support our strategy of driving long-term growth and shareholder value.  

"Also, in keeping with the company's strategy to provide comprehensive payment options to our customers, we are pleased to announce the recent signing of an agreement with Discover Financial Services to offer PayPal acceptance to our extensive U.S. merchant base," continued Mr. Garcia.

Acquisition Closings and Funding

Global Payments anticipates closing the Accelerated Payment Technologies (APT) acquisition for $413 million in October.  APT is an innovative provider of fully-integrated payment technology solutions for small to medium sized merchants.  APT markets its products and services primarily through a network of 700 value-added resellers (VARs) covering over 30 different vertical markets. In addition, the company anticipates closing the previously announced acquisition of the remaining 44% ownership interest in the Asia-Pacific joint venture for $242 million during the second quarter.

In the coming days, the company expects to close a new five-year senior unsecured term loan facility of as much as $700 million, and an increase in its existing senior unsecured revolving credit facility of as much as $150 million.  The company has received commitments from a syndicate of lenders and this new financing has been arranged by Bank of America Merrill Lynch, PNC Capital Markets and Regions Capital Markets. 

David Mangum, Senior Executive Vice President, Chief Financial Officer, stated,  "I am particularly pleased with our new financing arrangements which provide for capital flexibility to pursue our growth strategies.  This will allow us to deploy substantial capital for further organic growth, future acquisitions and on-going share repurchases."

Share Repurchase Update

Through September 26, 2012, the company repurchased 280,000 shares at an average price of $42.12 per share for a total of $11.8 million.  Under the current $150 million share repurchase authorization, $138.2 million remains available.

2013 Outlook

The company's full-year financial expectations have been updated to incorporate the anticipated closings of the two acquisitions and the new financing.

For the full-year of fiscal 2013, the company continues to expect annual revenue of $2,360 million to $2,400 million, or 7% to 9% growth over fiscal 2012.  On a partial year basis, the company expects the APT transaction to add approximately 50 basis points of incremental cash operating margin to the total company for fiscal 2013.  Annual expectations for fiscal 2013 diluted earnings per share on a cash basis remain unchanged at $3.59 to $3.66, or growth of 2% to 4% over fiscal 2012.  On a constant currency basis, the company continues to expect revenue to grow 8% to 10% and diluted earnings per share on a cash basis to grow 4% to 6%. 

Annual fiscal 2013 GAAP diluted earnings per share has been updated to include purchase price amortization related to the APT acquisition; we now anticipate the range for annual GAAP diluted earnings per share to be $2.99 to $3.06 (See Schedule 8 for more detail).    

Both cash and GAAP diluted earnings per share expectations exclude the impact of any potential future share repurchases and the full-year impact of all remediation costs.

Conference Call

Global Payments will hold a conference call today, September 27, 2012 at 5:00 p.m. EDT to discuss financial results and business highlights.  Callers may access the conference call via the investor relations page of the company's website at www.globalpaymentsinc.com by clicking the "Webcast" button; or callers in North America may dial 1-888-895-3550 and callers outside North America may dial 1-706-758-8809.  The pass code is "GPN."  A replay of the call may be accessed through the Global Payments website through October 10, 2012.   

About Global Payments

Global Payments Inc. (NYSE: GPN) is a leading provider of electronic transaction processing services for merchants, Independent Sales Organizations (ISOs), financial institutions, government agencies and multi-national corporations located throughout the United States, Canada, Europe and the Asia-Pacific region.  Global Payments, a Fortune 1000 company, offers a comprehensive line of processing solutions for credit and debit cards, business-to-business purchasing cards, gift cards, electronic check conversion and check guarantee, verification and recovery including electronic check services, as well as terminal management.  Visit www.globalpaymentsinc.com for more information about the company and its services.

This announcement and comments made by Global Payments' management during the conference call may contain certain forward-looking statements within the meaning of the "safe-harbor" provisions of the Private Securities Litigation Reform Act of 1995.  Statements that are not historical facts, including revenue and earnings estimates and management's expectations regarding future events and developments, are forward-looking statements and are subject to significant risks and uncertainties.  Important factors that may cause actual events or results to differ materially from those anticipated by such forward-looking statements include the following: the effect on our results of operations of the remediation efforts resulting from the unauthorized access to our processing system announced in March 2012, and the impact on our results of operations; foreign currency risks which become increasingly relevant as we expand internationally, the effect of current domestic and worldwide economic conditions, including sovereign insolvency situations and a decline in the value of the U.S. dollar, and future performance and integration of acquisitions including APT, and other risks detailed in the company's SEC filings, including the most recently filed Form Form 10-K, as applicable.  The company undertakes no obligation to revise any of these statements to reflect future circumstances or the occurrence of unanticipated events.

1 See Schedule 2 for Cash Earnings and Schedules 6 and 7 for Reconciliations of Cash Earnings to GAAP.

Investor contact:  investor.relations@globalpay.com     

Media contact: media.relations@globalpay.com

Jane Elliott             

Kay Sharpton            

Amy Corn

770-829-8234          

770-829-8870         

770-829-8755


 

SCHEDULE 1







GAAP CONSOLIDATED STATEMENTS OF INCOME 





GLOBAL PAYMENTS INC. AND SUBSIDIARIES
















(In thousands, except per share data)




















Three Months Ended August 31,







2012


2011


% Change





(unaudited)












Revenues




$        590,287


$         542,771


9%










Operating expenses:







     Cost of service



204,391


191,536


7%

     Sales, general and administrative


281,419


242,625


16%

     Processing system intrusion


23,989


-


NM





509,799


434,161


17%










Operating income



80,488


108,610


(26%)










Other income (expense):







     Interest and other income


1,983


2,501


(21%)

     Interest and other expense


(3,545)


(4,087)


(13%)





(1,562)


(1,586)


(2%)










Income before income taxes 


78,926


107,024


(26%)

Provision for income taxes


(24,764)


(34,943)


(29%)

Net income



54,162


72,081


(25%)

Less: Net income attributable to noncontrolling interests, net of tax


(7,487)


(8,107)


(8%)

          Net income attributable to Global Payments


$          46,675


$           63,974


(27%)










Earnings per share attributable to Global Payments:







    Basic




$              0.59


$               0.80


(26%)

    Diluted




$              0.59


$               0.79


(25%)










Weighted average shares outstanding:







          Basic



78,604


80,076



          Diluted



79,043


80,831





















NM - Not Meaningful







 

 

SCHEDULE 2







CASH EARNINGS ATTRIBUTABLE TO GLOBAL PAYMENTS





GLOBAL PAYMENTS INC. AND SUBSIDIARIES














(In thousands, except per share data)
















Three Months Ended August 31,





2012


2011


% Change








Revenues


$         590,287


$       542,771


9%








Operating expenses:







     Cost of service


193,005


178,893


8%

     Sales, general and administrative


280,619


242,625


16%



473,624


421,518


12%








Operating income


116,663


121,253


(4%)








Other income (expense):







     Interest and other income


1,983


2,501


(21%)

     Interest and other expense


(3,545)


(4,087)


(13%)



(1,562)


(1,586)


(2%)








Income before income taxes 


115,101


119,667


(4%)

Provision for income taxes


(36,553)


(38,682)


(6%)

Net income


78,548


80,985


(3%)

Less: Net income attributable to noncontrolling interests, net of tax


(9,752)


(10,172)


(4%)

Net income attributable to Global Payments


$           68,796


$         70,813


(3%)















Basic earnings per share


$               0.88


$             0.88


0%








Diluted earnings per share


$               0.87


$             0.88


(1%)








Weighted average shares outstanding:







          Basic


78,604


80,076



          Diluted


79,043


80,831

















NM - Not Meaningful














See Schedule 6 for a reconciliation of cash earnings from continuing operations to GAAP.

 

 

SCHEDULE 3












SEGMENT INFORMATION












GLOBAL PAYMENTS INC. AND SUBSIDIARIES






















(In thousands)





































 Three Months Ended August 31, 












2012


2011


 % Change 








 GAAP 


 Cash Earnings 


 GAAP 


 Cash Earnings 


 GAAP 


 Cash Earnings 



















Revenues:














United States



$    345,898


$    345,898


$    287,425


$    287,425


20%


20%

Canada



80,897


80,897


91,221


91,221


(11%)


(11%)


North America merchant services


426,795


426,795


378,646


378,646


13%


13%



















Europe



128,465


128,465


129,414


129,414


(1%)


(1%)

Asia-Pacific



35,027


35,027


34,711


34,711


1%


1%


International merchant services


163,492


163,492


164,125


164,125


(0%)


(0%)





















Total revenues


$    590,287


$    590,287


$    542,771


$    542,771


9%


9%



















Operating income:














North America merchant services


$      67,217


$      71,443


$      71,758


$      74,616


(6%)


(4%)

International merchant services


57,140


65,044


55,658


65,443


3%


(1%)

Corporate1



(43,869)


(19,824)


(18,806)


(18,806)


(133%)


(5%)



Operating income


$      80,488


$    116,663


$    108,610


$    121,253


(26%)


(4%)























































1 August 31, 2012 GAAP amounts include processing system intrusion costs of $24.0 million


See Schedule 7 for reconciliation of cash earnings segment information to GAAP. 


 

 

SCHEDULE 4




CONSOLIDATED BALANCE SHEETS




GLOBAL PAYMENTS INC. AND SUBSIDIARIES








(In thousands)









August 31,


May 31,


2012


2012


(unaudited)



ASSETS




Current assets:




Cash and cash equivalents

$         841,331


$       781,275

Accounts receivable, net of allowances for doubtful accounts of $1,032 and $532, respectively

179,875


182,962

Claims receivable, net of allowance for losses of $3,784 and $3,435, respectively

1,082


1,029

Settlement processing assets

236,384


217,994

Inventory

12,839


9,864

Deferred income taxes

25,691


21,969

Prepaid expenses and other current assets

39,679


33,646

Total current assets

1,336,881


1,248,739





Goodwill

740,891


724,687

Other intangible assets, net of accumulated amortization of $251,829 and $235,296, respectively

284,625


290,188

Property and equipment, net of accumulated depreciation of $177,228 and $161,911, respectively

324,005


305,848

Deferred income taxes

96,558


97,235

Other

22,532


21,446





Total assets

$      2,805,492


$    2,688,143





LIABILITIES AND EQUITY




Current liabilities:




Lines of credit

$         209,254


$       215,391

Current portion of long-term debt

47,541


76,420

Accounts payable and accrued liabilities

300,270


316,313

Commitment to purchase redeemable noncontrolling interest

242,000


-

Settlement processing obligations

228,771


216,878

Income taxes payable

18,110


12,283

  Total current liabilities

1,045,946


837,285





Long-term debt

285,464


236,565

Deferred income taxes

124,096


106,644

Other long-term liabilities

66,966


62,306

Total liabilities

1,522,472


1,242,800





Commitments and contingencies








Redeemable noncontrolling interest

-


144,422





Equity:




Preferred stock, no par value; 5,000,000 shares authorized and none issued

-


-

Common stock, no par value; 200,000,000 shares authorized; 78,819,988 and




 78,551,297 issued and outstanding at August 31, 2012 and May 31, 2012, respectively.




Paid-in capital

258,084


358,728

Retained earnings

889,370


843,456

Accumulated other comprehensive income (loss) 

1,498


(30,000)

      Total Global Payments shareholders' equity

1,148,952


1,172,184

Noncontrolling interest

134,068


128,737

Total equity

1,283,020


1,300,921





Total liabilities and equity

$      2,805,492


$    2,688,143